Notes
Stock Option Plans
The Company has stock option plans under which options have been granted to purchase shares of the Company’s common stock at prices established by the Compensation and Benefits Committee of the Board of Directors. The 1995, 1998 and 2002 Stock Option Plans made available 24,000,000, 10,000,000 and 12,500,000 shares, respectively, of the Company’s common stock for the granting of options to employees. At September 30, 2003, shares available for future grant under the 1995, 1998 and 2002 Plans were 664,970, 476,730 and 9,248,366, respectively. The Non-Employee Directors 2000 Stock Option Plan made available 1,000,000 common shares for the granting of options, of which 899,690 remained available for future grant as of September 30, 2003.
A summary of changes in outstanding options is as follows:
| |
2003 |
2002 |
2001 |
 |
| |
|
|
|
Weighted |
|
|
|
|
Weighted |
|
|
|
|
Weighted |
|
| |
|
Options |
|
Average |
|
|
Options |
|
Average |
|
|
Options |
|
Average |
|
| |
|
for |
|
Exercise |
|
|
for |
|
Exercise |
|
|
for |
|
Exercise |
|
| |
|
Shares |
|
Price |
|
|
Shares |
|
Price |
|
|
Shares |
|
Price |
|
|
| Balance at October 1 |
30,388,618 |
|
$ |
26.02 |
|
28,271,329 |
|
$ |
23.80 |
|
30,516,315 |
|
$ |
21.29 |
|
| Granted |
5,391,172 |
|
|
30.02 |
|
5,460,162 |
|
|
32.45 |
|
|
4,635,232 |
|
|
31.90 |
|
| Exercised |
(5,004,027 |
) |
|
17.26 |
|
(2,570,626 |
) |
|
13.53 |
|
|
(5,354,447 |
) |
|
15.34 |
|
| Forfeited, canceled or expired |
|
(659,462 |
) |
|
31.59 |
|
|
(772,247 |
) |
|
31.98 |
|
|
(1,525,771 |
) |
|
28.20 |
|
|
| Balance at September 30 |
30,116,301 |
|
$ |
28.07 |
|
30,388,618 |
|
$ |
26.02 |
|
28,271,329 |
|
$ |
23.80 |
|
|
| Exercisable at September 30 |
19,389,311 |
|
$ |
26.33 |
|
19,682,329 |
|
$ |
22.92 |
|
20,534,073 |
|
$ |
21.30 |
|
|
| Weighted average fair value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| options granted |
$ |
10.20 |
|
|
|
|
$ |
11.59 |
|
|
|
|
$ |
12.08 |
|
|
|
|
|
| Available for grant at September 30 |
11,289,756 |
|
|
|
|
16,020,386 |
|
|
|
|
|
8,246,462 |
|
|
|
|
|
The maximum term of options is ten years. Options outstanding as of September 30, 2003 expire on various dates from January 2004 through September 2013.
| |
|
|
September 30, 2003 |
|
| |
|
|
Options Outstanding |
Options Exercisable |
|
| |
|
|
|
|
Weighted |
|
Weighted |
|
|
|
Weighted |
|
| |
|
|
|
|
Average |
|
Average |
|
|
|
Average |
|
| Range Of |
|
Number |
|
Exercise |
|
Remaining |
|
Number |
|
Exercise |
|
| Option Exercise Price |
|
Outstanding |
|
|
Price |
|
Contractual Life |
|
Exercisable |
|
Price |
|
|
| $ |
8.64–$12.55 |
|
1,791,082 |
|
$ |
11.47 |
|
1.1 Years |
|
1,791,082 |
|
$ |
11.47 |
|
| |
18.83– 25.63 |
|
6,942,444 |
|
|
22.91 |
|
3.0 Years |
|
6,942,444 |
|
|
22.91 |
|
| |
27.25– 34.96 |
|
19,172,717 |
|
|
30.66 |
|
7.4 Years |
|
8,533,370 |
|
|
30.04 |
|
| |
35.03– 41.56 |
|
2,210,058 |
|
|
35.19 |
|
5.5 Years |
|
2,122,415 |
|
|
35.12 |
|
|
| |
|
|
30,116,301 |
|
$ |
28.07 |
|
6.3 Years |
|
19,389,311 |
|
$ |
26.33 |
|
|
As permitted by SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company has adopted the disclosure-only provision of the Statement and applies APB Opinion No. 25 and related interpretations in accounting for its employee stock plans.
The 1990 Plan has a provision whereby unqualified options may be granted at, below, or above market value of the Company’s stock. If the option price is less than the market value of the Company’s stock on the date of grant, the discount is recorded as compensation expense over the service period in accordance with the provisions of APB Opinion No. 25. There was no such compensation expense in 2003, 2002, or 2001.
Under certain circumstances, the stock option plans permit the optionee the right to receive cash and/or stock at the Company’s discretion equal to the difference between the market value on the date of exercise and the option price. This difference would be recorded as compensation expense over the vesting period.
Other Stock Plans
The Company has a compensatory Stock Award Plan which allows for grants of common shares to certain key employees. Distribution of 25% or more of each award, as elected by the grantee, is deferred until after retirement or involuntary termination. Commencing on the first anniversary of a grant following retirement, the remainder is distributable in five equal annual installments. During 2003, 60,684 shares were distributed. No awards were granted in 2003, 2002, or 2001. At September 30, 2003, 2,260,389 shares were reserved for future issuance, of which awards for 159,001 shares have been granted.
The Company has a compensatory Restricted Stock Plan for Non-Employee Directors which reserves for issuance 300,000 shares of the Company’s common stock. No restricted shares were issued in 2003, 2002, or 2001.
The Company has a Directors’ Deferral Plan which provides a means to defer director compensation, from time to time, on a deferred stock or cash basis. As of September 30, 2003, 149,996 shares were held in trust, of which 9,049 shares represented Directors’ compensation in 2003, in accordance with the provisions of the Plan. Under the Plan, which is unfunded, directors have an unsecured contractual commitment from the Company to pay directors the amounts due to them under the Plan.
The Company also has a Deferred Compensation Plan that allows certain highly-compensated employees, including executive officers, to defer salary and annual incentive awards. As of September 30, 2003, 165,100 shares were issuable under this plan.
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